These advancements are reshaping industries and redefining how work is done. Small businesses can’t afford to be left behind.
Leading authorities in artificial intelligence (AI) and machine learning (ML) say these innovations will allow customer experiences to be more personalised, automation to be enhanced, and analytics to become more predictive. Generative AI will expand its applications, from creating content to designing products, giving businesses new tools to boost efficiency and creativity.
Will it mean the loss of jobs?
Yes and no. All technology does someone out of work somewhere, but it also provides work in new areas.
Adaptability in the workforce is key, and employers should encourage it. The Internet of Things (IoT) devices will likely become more prominent, offering deeper insights into operational efficiencies, supply chain management and customer behaviour. While most people’s eyes glaze over at the concept of quantum computing (look it up), it’s likely to advance further to solve complex problems in industries such as finance, healthcare and logistics.
Blockchain technology will probably evolve beyond crypto- currencies, becoming pivotal in secure transactions, supply chain transparency and management of people’s identity.
As we become more reliant on technology, cybersecurity will become a top priority, especially for businesses. Zero-trust architectures and AI-driven threat detection systems will be crucial for safeguarding data and infrastructure. How can small businesses keep up? The trick is to be informed. Think about what happens in your business, especially the time-consuming tasks.
See if there’s a new tool to do the job better, whether it’s customer relations software for a restaurant or technology that will detect water leaks better for a plumber.
Whatever your business, there are almost always better ways of doing what you do now. Find out what they are, and make sure your business is operating as efficiently as it can.
Just a reminder – if you make a profit out of investing in a crypto currency, that profit is taxable income. Inland Revenue’s rationale is that the only reason you could possibly have for investing in a crypto currency is to make a profit. There’s generally no other form of income. Unlike a rental property, you don’t get a combination of income and capital gain.
However, some crypto currencies are paying a return on crypto held in the form of more crypto. In those cases there is an argument that it is purchased for that purpose not sale.
KiwiSaver can start earlier
The Budget proposes to allow people under the age of 16 to be enrolled in KiwiSaver if one of their guardians contracts directly with the provider in the name of the young person. This is expected to come into effect from 1 July 2025.
Make a guarantee mean it
When you give a guarantee on a product or service, make it mean something. Saying “we guarantee the highest quality” doesn’t mean anything. We noticed an advertisement recently on the wall at Mitre10 saying: “We will replace any plant you buy from us if it fails to thrive. Just return it within 12 months with proof of purchase.” This is a clear guarantee. Take back your receipt and the dead plant and they’ll replace it. Mitre10 might get a customer or two who don’t take care of a plant, but the risk is a small price to pay for honouring a real guarantee.
When double-checking your work, use a different method than the one you used to calculate the figures in the first place.
For example, back in the day before advanced computing, you might have added up figures from a bank statement to prepare a GST return. To check it, you’d work backward – compare the totals on your adding machine tape back to the bank statements.
Use common sense, too. Does the number look reasonable? Is it close to what you’d expect?
Sometimes, you just need a rough idea to know your total is likely to be accurate. For instance, if you have a column of numbers ranging from $1 to $5000, you can estimate like this:
With this method, you can quickly get a rough total in your head without needing an adding machine.
Keep a close watch on your debtors ledger.
Prevention is better than cure
Don’t offer credit unless it’s absolutely necessary. If you do, make sure you check out new customers thoroughly:
If issues arise
Keep detailed records of every follow-up – date, time, and what the customer promised.
When speaking with a customer, get a firm commitment, even if it’s to pay in instalments, and get specific dates and amounts.
Remind them of their promises each time: “On [date], you said . . . On [another date], you said. . .”
If they still don’t pay, send a formal demand letter outlining the amount owed, a deadline for payment, and the consequences of not paying.
Depending on the amount owed, consider hiring a lawyer or a debt collection agency.
Tip
If a business is going broke, those who have the best chance of being paid are the ones who are the quickest and most persistent.
Inland Revenue charges 10.88 percent interest on short paid tax where the year end tax figure exceeds $60,000.
Clients often get caught when they get a surge in income.
For example, a medical practitioner might have had tax for the year ended 31 March 2024 of $80,000. They pay provisional tax based on this figure, increased by 5 percent – $84,000. But they became a partner during the year and they now get partnership income as well as their normal income.
Let’s suppose the total tax for the year ending 31 March 2025 comes out at $124,000. There’s a $40,000 shortfall ($124,000-$84,000) and this is subject to Use Of Money Interest charged at 10.88 percent.
Assuming the shortfall of tax is paid six months after 7 May 2025 the interest charge works out as follows: 10.88 percent on $40,000 for six months = $2176.
By the way, this extra $2176 is tax-deductible (because it’s interest) so don’t forget to claim this when you put in your tax return.
If your accounts cannot be done by 7 May 2025, you could guess your income for the year and top up the third instalment of provisional tax. In the example above, you would usually pay $28,000 at 7 May 2025 but you could avoid the interest charge if you increased this to $68,000.
Obviously, most people won’t know how much to guess, but a best guess is probably going to be cheaper than doing nothing at all.
March 31 is approaching – tax balance date for most people. Get your house in order to minimise hassles and tax.
Bad debts
If someone owes you money and you don’t think they’ll pay, you need to write it off as a bad debt before your balance date. You can’t decide later—it’s against the rules. Check your debtors ledger, and if you’ve done everything reasonable to collect the money but it’s still unpaid, write it off. Remove it from your ledger.
If you use a simple system, like keeping unpaid invoices, make it clear the debt was written off before balance date. For instance, write “Written off 20 February 2025” on the invoice, sign it, and scan it back into your records. You can still try to recover the debt later.
If you do get paid, treat it as income under a name like “bad debts recovered”.
Stock-take
Organise your stock and get rid of anything you can’t sell. If you still have it at balance date, include it in your stock-take at cost price.
If you want to value stock below cost, you’ll need proof that its market value is lower. For example, show a competitor selling the same product for less, and keep a record.
Make sure you don’t double count or miss anything. For instance, if you’ve paid for stock that hasn’t turned up yet, include it in your stock numbers since you’ve already paid for it.
Logbooks for motor vehicles
If you need a logbook for your vehicle, remember it has to be updated every three years. At some point, Inland Revenue could want to see the log book, so it’s better to stay compliant.
You need to track your travel for three months to calculate how much is for business versus personal use. We recommend recording both business and personal travel – it’s easy to forget a trip, and anything unrecorded will default to personal use.
Take an odometer reading after work on the last day of your financial year and note it down. If you’re running a limited liability company and were accounting for private vehicle use as a fringe benefit (usually 20 percent of the GST- inclusive cost), you don’t need a logbook.
Maintenance of equipment
If you’ve got maintenance work planned and want to reduce your taxable income for the year, get it done before balance date.
Holiday pay
If you pay holiday pay within 63 days of the end of the financial year (by 2 June for March balance dates), you can claim it as an expense in the previous year. Just include it as a creditor on your list of bills owing at balance date.
Just before Christmas, IRD shared its view on how these incentives should be taxed. To keep this article straightforward, we’re assuming you’re running a regular limited liability company. The same rules apply to sole traders, partnerships, and Look-through companies, except fringe benefits do not apply to the owners – these rewards are simply taxable income.
Trading trusts are a bit different since they don’t have working owners. Instead, employees (including beneficiaries or settlors) get incomes subject to PAYE.
Gift cards
If you’re given a gift card that can be used almost anywhere (an open- loop card), it’s treated like cash because of its flexibility to be used anywhere.
Taxable Income
If you give the card to an employee, it’s like giving them a bonus.
You’ll need to deduct PAYE on the “grossed-up” amount. For example, if the card is worth $200, you’d calculate how much you’d need to pay to give $200 after PAYE deductions and include this in your PAYE return.
If the card can be used only in specific places (a closed-loop card), the rules are different. It’s considered a fringe benefit, so the $300 per person per quarter limit applies.
If you’re a shareholder-employee and keep the card, it’s treated as an unclassified fringe benefit.
Products from suppliers
If you get a spending reward like a barbecue, it’s taxable income based on how much you could sell it for. If you use it in your business, it becomes a business asset. At the moment Inland Revenue is saying you cannot claim depreciation. We are hoping this policy will change. The department is also saying if you use the rewards to reduce your debt to the supplier, you don’t get a deduction for the cost. Again, we hope this will be changed.
If you give it to an employee, it’s an unclassified fringe benefit and follows the same rules as closed-loop cards.
GST
Rewards include GST, so you’ll need to pay GST on them.
For the supplier
Businesses giving out these rewards can usually treat the cost as tax- deductible.
Points
Some suppliers offer points instead of gifts. IRD hasn’t clarified how to treat these, but it’s likely the income applies only once the points are redeemed for a gift.
A client recently needed some plumbing work done. Her usual plumber said he was "too busy" and wouldn't say when he'd be available.
Since the job was fairly urgent, she called another plumber, a young guy eager to grow his business. They exchanged a few texts, figured out what needed to be done, and set up a time that worked for her.
He got delayed on the way, but what he did next pretty much guaranteed him a lifelong customer. He called to let her know he'd be a bit late but would be there soon, and he arrived less than 10 minutes later.
The client wasn't bothered by the delay at all. In fact, she told the plumber she was impressed he took the time to call. He seemed a bit puzzled and said, "That's just common courtesy, isn't it?"
It is common courtesy, but it's often overlooked these days. Courtesy won this plumber a new client, while a lack of it cost the other plumber valuable business.
One of the most used AI tools for small businesses is creative writing. That’s because business people don’t necessarily make great writers.
So how is AI being used? Think about what writing you do through the day. Maybe as a builder, for example, you don’t think you do a lot of writing. But:
• You have to write emails to prospective clients, saying how good you are.
• You will occasionally have to reply to an unhappy client.
• You will need to write the words for an advertisement or flyer.
• You will need to keep your website or social media page up to date.
Once you start using AI writing tools, you’ll find all sorts of other uses. But always remember, AI is not you. If the words AI spits out don’t reflect your true personality or faithfully reflect your business brand, people who know you will be wary. Check everything before you press ‘Send’.
AI is here for good, but most small and medium businesses (SMEs) in New Zealand are still reluctant to adopt it.
The reasons: not understanding how it can be used, and little appreciation of its value to a business. However, some business pundits are suggesting those who adopt AI now will gain the most in years to come.
The reality is that AI can make a valuable contribution to your productivity. So how else can it help your business?
There’s a simple answer – ask AI. Be as detailed as you can about your business in your questioning. You might be a retailer, but you sell imported giftware in the city. You might be a plumber, but your specialty is drain laying in rural areas.
There are lots of AI programs to choose from, so just search online: “Ask AI a question”. You might be surprised at the answers.
We’ve all been there. The window is cracked or the tap is leaking. You think you’re handy so you try to fix it yourself.
You get a new pane of glass or a washer for the tap. Two hours later, you’ve broken the new pane and the tap is leaking worse than before.
The tales in small business are similar, but actually more important.
That’s because time is money. Your money.
If you need help in your business, whether it’s an IT issue or financial management, think first about whether you or any of your staff are actually the best people to do the job. How much time will it take, and how much will it divert your focus from the most important parts of your business? Could a DIY approach burn you out?
Most importantly, will you get the right results?
When you hire someone else to do the job, you’re expecting expertise, results, and a cost you can afford. Plus you’ll be helping the money-go-round by paying another business.They might even become a customer of yours!
Put simply, if your time can be sold for $80 an hour and you spend four hours fixing a problem an IT expert could do in one hour (costing you say $150), you are out of pocket. Income you could have earned: 4x$80 = $320. Less cost of $150 = $170 wasted. This assumes you are running a successful business and there is a good demand for your time.
